In This Episode

Pew president and CEO Rebecca Rimel shares her thoughts on the value of non-partisanship and civil dialogue. Plus, two veteran lawmakers reach across the aisle and discuss what is needed to find middle ground today.

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After the Fact

“After the Fact” is a podcast from The Pew Charitable Trusts that brings you data and analysis on the issues that matter to you—from our environment and the sciences, to larger economic trends and public health.

Senator Susan Collins (R-ME) wants to understand why prescription drug prices are spiking, pinpoint who is profiting, and ensure that American consumers can get the medicines they need.

In a July 16 speech at The Pew Charitable Trusts in Washington, Sen. Collins posed the kind of questions she wants answered. Why, for example, did the cost of a common sleeping aid soar from $69.88 to $659 since the beginning of the year?

Why did the price of a drug used to treat Wilson’s disease, a rare genetic disorder that can be fatal, increase from $652 per month to more than $21,000 per month?

And why did two hospital drugs that save lives in cases of cardiac arrest rise from approximately $2,000 to $8,800 and $17,900, respectively?

“With prescription drugs among the greatest factors driving up the cost of health care, it is essential that we better understand the underlying causes of soaring prices so that we can develop and implement policies that both encourage innovation and protect consumers,” Sen. Collins told an audience of nearly 100 people.

These days, “we might define a miracle drug as one that has not doubled in price since the last refill,” the senator said.

Annual spending on prescription drugs in the United States now exceeds $450 billion and is projected to outpace growth in other parts of the health care sector over the next decade. Many consumers are having trouble affording their prescriptions, Sen. Collins noted.

“I was in line behind a couple at a pharmacy in Bangor, Maine,” she said. “When they learned that their co-pay for a prescription was $111, they simply walked away, unable to afford it.” When she asked the pharmacist if this was common, he told her it happened every day.

Collins said she and her colleagues are investigating why prescription prices are so high. The Senate Health, Education, Labor, and Pensions Committee, on which she serves, has examined drug spending; consumer costs; and inefficiencies that can be eliminated to lower expenses for patients while allowing development of innovative new cures and treatments to continue, she added.

“One [Senate Aging Committee] hearing earlier this year on rheumatoid arthritis revealed that drugs developed decades ago to provide relief from that painful condition have doubled in price since 2012—from $19,000 per year to more than $38,000 today,” she said.

Sen. Collins said she wants to focus on the role of pharmacy benefit managers (PBMs), third-party administrators of prescription drug benefits. Some contracts between PBMs and pharmacies contain “gag clauses” that prohibit pharmacists from telling consumers that their prescription would cost less if they paid for it out of pocket rather than using their insurance, she told the audience.

“Given the high health insurance premiums many Americans pay, how can it be that an insurance company’s prescription benefit manager, whose very job it is to negotiate lower drug prices, could instead be negotiating to increase [its] own profits, driving up drug prices for consumers and forcing them to pay more for a drug with their insurance than they would pay if they had no insurance at all?” she asked.

For example, a PBM or insurer may institute a flat $10 copayment for all generic medications, regardless of whether the cash price is $5 or $15. A gag clause prohibits a pharmacist from pointing out to the patient that the $5 cash price for a medication would be less than the $10 copayment.

“This situation reveals a troubling lack of transparency in the pharmaceutical system,” she said.

Collins has worked in recent years to make prescription drugs more affordable and accessible. In 2015, she led a congressional investigation into how drug prices were soaring at the expense of consumers. She then sponsored bipartisan legislation with Senator Claire McCaskill (D-MO) to improve generic drug competition with the intent to reduce costs. The measure was signed into law in 2017.

There is little public data on the existence or prevalence of gag clauses. Still, several states have passed legislation prohibiting PBMs and insurers from including them in pharmacy contracts and dictating that PBMs cannot prohibit pharmacists from informing patients that paying the cash price of a drug would be cheaper than filing the prescription with their insurance.

In 2017, many states enacted additional policies intended to bring down drug costs, including Medicaid spending caps; out-of-pocket spending limits; utilization management tools, which are techniques to determine the appropriateness of a certain treatment; price transparency; and substitution of biosimilars—essentially the generic version of complex, biologic drugs derived from living cells—at the pharmacy counter.

“States are the laboratory of innovation, and I think we can learn a lot from them,” Collins said in response to a question after her speech.

Pew’s drug spending research initiative works with state and federal lawmakers to examine the underlying drivers of rising prescription drug costs and identify policy options to better manage spending on these products.

Sen. Collins said she is encouraged that the issue of keeping drug costs down brings both sides of Congress together “at a time when bipartisanship seems like an increasingly rare commodity.”

Susan K. Urahn, Pew’s executive vice president and chief program officer, noted in her introduction of Collins that the senator has a history of working with colleagues from both parties. “For the past four years, Senator Collins was ranked the most bipartisan member of the Senate by the Lugar Center and Georgetown University,” Urahn said.

And that approach will be needed to address these issues. Collins expressed optimism about the battle to rein in drug costs.

“While the lion’s share remains to be done, the multitude of hearings, letters, bills, and milestones so far demonstrate a pattern of working together and across the aisle to help reduce the cost of prescription drugs,” she said.